SP Ausnet in fire cost dispute

Nearly 600 firefighters with 152 trucks are battling blazes across NSW, supported by more than 70 aircraft. Photo: Getty Images

Mathew Dunckley
and Jake Mitchell

KEY POINTS

SP Ausnet has been allowed to pass on Black Saturday bushfire court costs to customers.

The decision has prompted bipartisan opposition in Victoria.

Amcor has also criticised the move.

Energy company SP Ausnet is facing furious bipartisan opposition from Victorian politicians backed by big industry, in response to its plan to recoup bushfire damages claims from its customers.

The ASX-listed SP Ausnet faces costly court claims over the Black Saturday bushfires and applied to the Australian Energy Regulator last year to be allowed to pass on to customers the cost of damages if it exceeded its insurance cover in the case of major disasters.

The submissions were released yesterday as Victorian firefighters braced for high temperatures across the state today and two more houses were destroyed as blazes continued to burn in NSW.

Mr O’Brien said the government would oppose an outcome that resulted in “victims of negligence paying for damage cause by their electricity network”.

He said the proposal would allow companies to recoup money from events that were within their control, which would act as a disincentive to take out appropriate levels of insurance or minimise the likelihood of such events.

Ms D’Ambrosio said the proposal was unacceptable on both moral and policy ground.

“It creates a perverse incentive to under-invest in their distribution network and/or take more risks given they are likely to be able to pass through any costs in excess of their insurance coverage,” she said.

Ms D’Ambrosio said that if a company was under-insured then it should bear the consequences of that decision.

Amcor group manager of resources and energy Peter Dobney also blasted the proposal.

He said that it effectively allowed distribution companies to avoid taking any risk. “They can easily recover any unforeseen cost by applying to the AER for consideration as a pass-through event,” he said in a submission.

“The draft determination by the AER does not mirror commercial reality and in fact quarantines the shareholders of distribution companies from any risk whatsoever.”

Mr Dobney said the decision made a mockery of national electricity market rules.

In its submission, SP Ausnet welcomed the draft decision arguing that disallowing the clawback would cost millions to acquire insurance that covered the increased risk.

It was for this reason, SP Ausnet’s submission said, that states often did not insure community assets.

It was also important too that companies had regulatory certainty and what SP Ausnet was seeking, it submission said, was in effect a continuation of a previous ruling.

A spokesman for the AER said a final decision on SP AusNet’s application would be made in the first quarter of this year.

“This is not a decision on the appropriateness of any pass-through amount. No application for any insurance pass-through amount has been made,” he said.